Staff recommends Council conduct a public hearing and approve the resolution setting and assessing the fees for encroachment rentals for FY24.

The City charges an annual rental fee for approved encroachments in the right-of-way. Some examples of encroachments are fences, restaurant patios, signs, and conduit. The City needs to assure safety and accessibility of the right-of-way, and for this reason, it requires an encroachment permit any time a property owner requests to use part of the right-of-way. Encroachment permit applications are processed and approved by the Public Works Department. A fee is collected with the permit application to cover the administrative costs of processing the application. If the encroachment is approved, annual assessments of the encroachment fee for the rental of the right-of-way will begin. The assessments will continue until the permit is revoked. Awning and canopies in the Central Business District are not charged an annual rental fee in accordance with Resolution 86-15316.

The annual encroachment rental fee had been set at $1.00 per square foot of the surface area of the encroachment from 1988 until FY21 when Council adopted new fees and methodology. The current methodology is a tier structure consisting of two tiers. Tier 1 encroachments have minimal impact to the right-of-way and include awnings, overhanging signs, conduit, and other encroachments that minimally impact accessibility of the right-of-way. Tier 1 encroachments will be set at $2.10 per square foot in FY24, an increase of $.10 per square foot.

Tier 2 encroachments have a major impact to the right-of-way and cause the part of the right-of-way that is encroached on to be unusable. Some types of Tier 2 encroachments are restaurant patios on the sidewalk, fences, stairs, and sheds.  The City began increasing Tier 2 encroachments in FY21 utilizing a five-year plan to gradually increase rates to 50% of the average taxable value of the adjacent properties, approximately $8.40 per square foot. For FY24, Staff is proposing to increase Tier 2 encroachments from $3.80 to $5.15 per square foot.  Staff is also recommending to increase the minimum fee from $20 per year to $25 per year to cover administrative costs. This additional revenue is recommended to be utilized in the beautification of the right-of-way.

Included in the resolution is the list of property owners and assessments at the proposed FY24 encroachment rental fee amounts.

City Council may:

• Approve the Resolution to revise the encroachment rental fees; or,
• Approve an amended resolution to revise and assess the fees at another specified rate, or; 
• Not approve the Resolution. If not approved, Council will need to approve a resolution at the September 25, 2023, Council meeting or no encroachment fees will be assessed for FY24.

The proposed FY24 encroachment rental fee will generate $108,324.66 for FY24. This is an increase of $25,382.47 over the FY23 revenues.